Earnings Call: Q4 2014

Mar 10, 2015

Well, good afternoon to everybody here in London. Good afternoon, depending on your time of day, to all those who are joining us via the internet. I was not going to give you a reminder about turning off the mobile phones, but it is easy to forget. So please do check if they are off. That said, welcome to Hannover Re's analyst conference. It is a pleasure to see that so many of you have taken up the invitation, and we are very delighted to present to you the numbers for the financial year 2014 in greater detail, the numbers which we have published already this morning. Today, we have a new feature compared to previous analyst conferences. We are offering an additional dial-in option for all those who were not able to participate physically here at the London Stock Exchange. As a reminder, the dialed-in participants will be in listen-only mode. If any participant has difficulties hearing the conference, please press the star key followed by zero on your telephone pad for operator assistance. First of all, Ulrich Wallin will kick things off with a brief overview of the 2014 financial year. Roland Vogel, our CFO, will then move on to present the financials in detail. Afterwards, we will be happy to respond at length to all your questions you might have. I would like to point out that you are kindly asked to wait for the microphone so that everybody can understand your question, even those who are not in the room. On that note, I am delighted to hand over to Ulrich Wallin. Yes, good afternoon and welcome to our presentation of our 2014 results. I will kick it off. I will also finish it off with the outlook for the coming year. Well, 2014, for us, was quite a good year, I would say. As you can see, we managed to increase the after-tax earnings of the group by more than 10%. This has been driven by strong underlying earnings from all segments, so that we could continue with our rather conservative policy when it comes to reserves, be it on the P&C side or be it on the life and health side. So from that point of view, we did not need to be aggressive on any of the various items of the profit and loss account and the balance sheet in order to generate this increased profitability. We also decided to increase the dividend by a special dividend of EUR 1.25 together with the ordinary dividend of EUR 3 to EUR 4.25. This is due to the fact that our capital grew rather remarkably by 28.2%. That, of course, would mean that the excess capital also has increased. Of course, the ROE for the current year would be under a little bit more stress so that it was the right time to start with the capital management for Hannover Re, which we already announced at our last Investor Day. You can see that the business continues to grow, even though at a lower pace, due to the rather challenging market on the P&C side. As well-publicized, the competition has increased quite significantly. But nonetheless, the business continues to grow on both the P&C business as well as the life and health business. As already mentioned, the bottom line grew more pronounced as compared to the top line, with almost 20% growth of the EBIT compared to last year and, as already mentioned, 10.1% of the after-tax earnings. Despite the significant growth of the capital, the ROE is still at a quite acceptable level with 14.7%. We continue to enjoy attractive ROEs. If you then look at the individual business groups. Overall, with the property casualty business, we are happy. We think development has been positive. EBIT grew by 12.2%. Admittedly, one might say that the combined ratio, particularly in the fourth quarter, some of you might have expected a slightly lower combined ratio. On the other hand, we are quite happy with the after-tax result of the P&C business group. We were also quite pleased that we could keep with our conservative loss reserving policy, which is the result, of course, of the quality of the underlying business. But also, and that shouldn't be forgotten, of the fact that the large losses came in well within the budget. This, of course, means there was no pressure or alleviation of pressure to the combined ratio from the large loss site, which really pretty much offset the pressure on the combined ratio, of course, had from the reduced rates, which we see as a result of the current soft market. Therefore, we could keep the loss reserving policy rather unchanged. A little bit better than we actually had expected. With the life and health business, I'm quite pleased that the earnings have actually increased. The EBIT increased by 75%, and also we had a 25% increase of the post-tax earnings. This is in line with what we are trying to tell you since quite some while. Certainly since the third quarter and fourth quarter of 2013. This year, this was still an easy target to have because our 2013 numbers, of course, were depressed due to the additional reserves that we put on the DII business, which we luckily can say now seem to be conservative. So what really happened in 2014, that result normalized. They are not terribly exciting, but they are more to the normal level that we expect from our life and health business. I would say the technical result, particularly in the fourth quarter, little bit below what we expecting. Again, partly, conservative reserving on the enhanced annuities, partly a negative deviation of the actual to expected on the ING portfolio. But overall, pretty much in line with expectation for 2014 as a whole year. But everything has a positive as well. If you look forward to 2015, we feel that there is room for further improvements of the results of life and health. We were very happy altogether with the investment results. Ordinary income up, which is quite remarkable considering the rather low interest rates environment that we are wrestling with. Here again, the increase in volume helped significantly. Also, it turned out to be quite favorable for us that we changed the functional currency of our Bermuda subsidiaries at the end of 2013 from EUR to USD. Because in restructuring the portfolio of around EUR 1.4 billion at the time into U.S. dollars, of course, that meant that we had to sell euro securities, which resulted in realized gains. At the same time, the new investment in U.S. dollars were done at a time when the interest rates in U.S. dollars had a little spike. So even on those investments, we already have realized gains. Also the running yield in U.S. dollars is slightly higher than in euros, particularly since recently the ECB started some new experiments with the euro currency. Overall, we were very pleased with our investment income. This is a broad overview of what we see for 2014. The finer details, Roland will explain to you in great detail. Thank you very much. Yes. Thank you, Willy. The good thing is that I have an interface to my surrounding again. My reading glasses broke 15 minutes before this meeting. But Axel was kind enough to get this quality U.K. product from the drugstore next corner. So I am online again. Thank you. Thank you, Willy. I think you mentioned already some parts or the major parts of our key figures and results. But I think we should start with, before we get into the detailed P&L, we should look at some key metrics or remarkable developments of key metrics, which were not only driven by us, but also by the markets or the EZB or whomever. First of all, the strong cash flow for 2014 nearly reached the EUR 2 billion mark again. We started a little bit slow into the year. I think we mentioned at previous occasions that there was one U.S. morbidity contract, and we might come to that contract again a little bit later, which was cash negative in the first two quarters. This will turn around, it has already, and it will turn around in 2015, so we will get that money back. But the second half year with very strong cash flow, which I think supports the positive message and the quality of the results, even with a little bit of more depressed overall growth, the cash flow stays very positive. On the right-hand side, the assets under own management, up by 14% or EUR 4.5 billion. I can tell you with the development of the U.S. dollar and the yields, especially the yields of the government bonds, this today is approaching EUR 39 billion. So the increase is really remarkable. Again, this is not only driven by a very good result, but also the yields and especially the currency exchange rates. The same goes for the capital position. On the next slide, equity increased by nearly EUR 1.7 billion or 28%. The policyholder surplus by EUR 1.5 billion. Why is that a little bit different? Because we paid back the EUR 750 million in February, and we issued the subordinated bond, and we issued a new subordinated bond in September with another EUR 500 million, which then, again, was the reason why the policyholder surplus decreased or the subordinated bonds here decreased a little bit. You might remember there is another call date coming up in June for EUR 500 million. Up to now, we indicated that the last EUR 500 million was already an early refinancing. This is not an announcement that we will call that, but up to now, we have called every subordinated bond at its first call date. One might expect that this green part of the bar might go down in June. On the other side of that slide, you see the increase in the shareholders' equity. I think that demonstrates very clearly where this increase, this strong increase, is coming from. First of all, of course, EUR 986 million of result. The dividend we paid last year was the EUR 362, and that demonstrates that the increase coming from the valuation reserves on our invested assets as well as the currency exchange rates. This is more than EUR 1 billion and is even higher than what we had produced as profits. Now, you might want to distinguish these two components. For the increased or the increased assets from the currency exchange rates, I think this is also reflected on the earnings side by higher US dollar, Aussie dollar, whatever earnings. So we earn also higher euro values on these amounts. When you look at the valuation reserves, the more than EUR 630 million in the middle, that is an increase in our capital base, which also will have an impact on the future ROIs. The overall number of OCI or capital driven by the valuation reserves in our asset portfolio is nearly EUR 1.2 billion. With a modified duration of five years, one could expect everything equal, we might lose EUR 120 million per year because this will run off. These will be capital components, which will disappear in the future. But it's only EUR 120 million per year. I think this leads us directly into the capital management actions, which Uli had already mentioned. Here you see a, from my point of view, impressive picture. If you look at the last six years, six years ago, we came here and mentioned that it is our intention to decrease the volatility in our earnings, to decrease the volatility in our dividend payments. If you look at that picture here, you see that we were rather successful, of course, helped by the markets and also the catastrophe components in our business. But even in 2011, which was the second highest natural catastrophe burden in the history of reinsurance, we managed to provide a good dividend. The EUR 3 plus the bonus do represent EUR 150 million. So that is what we kind of give back to our shareholders as a start of potential capital management action. The dividend yield today or a few days ago, 5%. If you go back to the beginning of the year, 6%. If you go back one year and you had invested in the Hannover Re share one year ago, the dividend yield would even be above 7%. One other perspective at the capital development and the ROEs we have provided and do provide. I think the chart demonstrates clearly the achievement. The average capital position has been increasing remarkably from the EUR 4 billion to the EUR 6.7 billion this year. Still, we managed to keep the ROE on a very, very high level. On the right-hand side, you see the average achievements. On the left-hand side, the last five years. The margins over above the hurdle, and we have shown here the old hurdle, the 750 basis points, as well as the new hurdle, the 900 basis points, has even increased over the last years. We have to bear in mind that this has got to be more challenging in the future with the high capital position and with also the higher volatile capital components I have tried to explain to you with the OCI positions, which might be volatile in the future. This has got to be more challenging into the future, and this is why we also look at managing the capital position as well as the income position up there. I think that then leads us directly into the peer comparison, which we always do. I think we are still the number one on the four-year horizon. This year, two Bermudian companies are in front of us. I think that is not very surprising because of the very low cat burden which the industry has been seeing. In that regard, we are still happy and we are still committed to stay one of the most profitable reinsurers in the industry, also in the future. Let's then have a brief look at the P&L in more detail. On the group level, I think it's not necessary to repeat the growth of the turnover of the premium. The first component, I think, which needs some explanation is the other income and expense line here. We have been long in the USD and other non-euro currencies already over the course of the year. In so far, the majority of that swing from minus EUR 100 to plus EUR 18 in the other expense line is based on the currency result. That should be zero if I manage my portfolio on a very highly matched basis. On the one hand, this is a little bit of one-off. On the other hand, I think where we were in doubt, we stayed a little bit longer in the foreign currencies as we saw the euro weakening, especially against the USD. This is why this line has improved so remarkably. Moreover, I think the other components here is the fee income on those contracts on the life side, which are deposit accounted, where the risk component is so low that there is no reinsurance treatment justified and the fee income is reflected in that line, and that has been increasing as well. Moreover, we have been rather successful in managing our LOC costs down. Also that is mainly on the life side, where it was possible to decrease the cost of the LOCs, which we, in the majority, need to back up our U.S. business. The tax rate is back to normal. You might remember that last year we had a special effect on the non-life on the P&C side, where the deferred taxes on equalization reserves could be calculated a little bit more realistically based on a decision of the German taxman that had produced a EUR 90 million extraordinary effect. That, of course, was not repeated this year. We are still a little bit on the low side based on a very positive result in Bermuda, where the tax rate is zero and where our CAT business is written mainly. The contribution from the low tax environments had been a little bit over proportional. Same goes for the life business, which we write in Bermuda. This is why the overall tax rate is a little bit lower than what we would expect for a normalized tax ratio, which should be around 25% on a group level. A brief look at the P&C side. We see a slight growth to 1.2% on a currency-adjusted basis, which is nice and which follows our guidance. Would this number have been negative, that would not have been a problem at all. It is positively influenced by some low-risk, low-margin Chinese surplus relief contracts, which we sometimes write. Sometimes the margins are not sufficient. Again, it's nice to see it growing. But if that would have been a negative number, we would not be concerned at all. The burden or the net retention has increased slightly. We pay a little bit less for our retrocessions, which makes itself felt here that the net premium income is growing a little bit more than the gross. Major losses, I think Uli has already mentioned the large loss budget was EUR 670 million. EUR 244 million of that budget was unused. In that regard, it was the third very low large loss number in a row, which of course also has its impact on the competition on the market. Perhaps, and also that was mentioned by Uli, let's discuss a little bit our reserving policy. If you look at the annual result and the run-off triangles, you will see a positive run-off of EUR 270 million. I think that is really fully in line with what I was trying to explain at the occasion of the Investors Day. An approximately EUR 50 million positive run-off would be expected per quarter. A little bit more than that for the year. So there are no extraordinary unusual effects on the run-off result. I would refer to my presentation at the same place a few months ago, where I was trying to explain the impacts which could be there on the confidence level as well as the run-off result. Nothing extraordinary here. In that regard, the combined ratio for the fourth quarter when we read your first comments seems to be a little bit disappointing. We, as Uli already mentioned, stuck to our reserving policy. We have most likely added, and we are waiting on the final results of the reserve studies, but we will most likely have added to the reserve redundancies, which our CRO always presents to you at the occasion of the Investors Day. We have to bear in mind that also the volume of the reserves has increased based on the currency exchange rate. So percentage-wise, we might have kept the overall confidence level flat. But in absolute terms, we will have increased redundant reserves numbers, which you might remember was EUR 1.5 billion based on the last study. That then also explains a little bit why the fourth quarter effect, which you had expected in the combined ratio, has not taken place to such an extent. I think that's it. Let's look at the MTCR and the achievements of the year per market on the P&C side. The margins are getting a little bit narrower. Still, even if you back out the very positive CAT result, we would still have made it, and the overall result of the business would have been still profitable. We shouldn't fool ourselves. The combined ratio of 39.3% is nothing which we could really see also in the future. Insofar, a large cat year might make the overall P&C result getting nearer to the breakeven point, and it is good to have buffers if that happens. Apart from that, again, we can briefly look at that. The North America business is still profitable below the hurdle or over above the hurdle. The Continental Europe positive with Germany also better than it used to be. The marine business after the big losses, Sandy, Costa Concordia, very profitable. Aviation, we know what happened there. The Tripoli Airport as well as the Malaysian airline disasters of course hit that. Credit surety profitable. The U.K. and London market and direct, we still had a little bit of problem on some casualty accounts where we were looked at conservatively. We expect that to be far better in the future. The worldwide treaty on the edge. Cat, of course, I mentioned that. Very profitable and, of course, the basis for also the overachievement. Structured reinsurance very positive and making the margin by far. The major losses I mentioned. You can see that here very clearly three years in a row. If you add all those amounts for the last three years where we were under the budgeted last loss numbers, that accounts for EUR 400 million. So the EUR 426, which you see here as compared to the EUR 670, the EUR 578 as compared to EUR 625. If you then go back to the year 2011, you see that all this, what we have saved within over the last three years can be gone within one year. In that regard, we should always bear that in mind and not fool ourselves that the very positive results in this segment might go on forever. You see the large losses. The single ones. Not a real single one was a very major loss. On the cat side, clearly below the budget with the Storm Ela in Germany, Belgium and the Netherlands with the highest large loss burden of around EUR 50 million for our account. The aviation claims with Tripoli and the Malaysian airline losses, as I already mentioned. Overall, as I mentioned, EUR 244 million below our budget. So another friendly packed picture, although not a glamorous picture. If we look at the life and health reinsurance we did various longevity deals. We took benefit from the improved and the hardening rates in Australia, and these were the major profit drivers. We did recede some of especially the longevity deals, and this is why the net retention goes down. On the technical side, Uli mentioned that the Australian DII business did really well. Fully in line with our expectations, even slightly better. So that explains the improvement here. The U.S. mortality still slightly below our expectations, but no bad surprises here as well. This is then the basis for the remarkable improvement. The other income here also is usually better than on the P&C side. It did benefit also from currency exchange rates, but here even also from the fee income of our deposited accounting, especially the financial reinsurance contracts which have improved as I mentioned before. Margin-wise, I think we are rather happy. Financial solutions, impressive margins. That is the business we especially write in the U.S. where our colleagues do provide coverage for the balance sheet or for the local balance sheet especially and that is improving and growing nicely. The longevity also over and above the target. The mortality and morbidity business, as I mentioned the U.S. mortality business, some of that business still not fully in line with our expectations. Here we can come back to that one U.S. health contract, morbidity contract, which we no longer write where we looked at reserves and increased the reserves or incurred some losses especially in the fourth quarter. Again, we no longer write that business, so this will not reoccur. This is also the reason as to why we look very positive into the future. Even better news if we turn the page and have a very brief look at the MCEV. That is hot off the press. For the first time, we managed to present the market consistent embedded value numbers together with our year-end results. We have demonstrated in our presentation, only the major numbers. You will find the details if you are interested. If you believe in MCEVs, then you will find the numbers in the appendix and on the website, especially the very new website of Hannover Re, which I think is worth visiting anyway. The MCEV has increased by 16% and is now nearly EUR 4.3 billion. I think even more importantly, the value of new business is, for three or even four years in a row now, on a very high level over and above our threshold of the target matrix with EUR 448 million. Again, another new record. Again, this is profit which we will earn for so long term, up until 20 years, 30 years. Still, with more than EUR 1 billion of new business value over the last three years. We are very confident that also the IFRS result will improve remarkably in the next years to come. Perhaps not mentioned on this page, but still important, is the MCEV, or market consistent embedded value, not recognized on the balance sheet. That increased from EUR 1 billion and EUR 10 million to EUR 1.12 billion, which is also an increase of more than EUR 100 million. Again, if you believe in MCEV numbers, that is another off-balance sheet value which Hannover Re carries. To come to the investment side, the ROE target from my point of view, as I'm responsible for that segment, of course, I look at that even a little bit closer. It is a little bit underrepresented or underestimated when we show it here. It includes the technical derivatives, which you see as the change in fair value of financial instruments. That is the ModCo derivatives as well as the inflation swaps. If we back that out, what we do in our target matrix, always the positives and the negatives, we end up at 3.3 ROI, which is a little bit over and above our target. If I come back very briefly to the impact of our subordinated bond redemption and reinvestment. Here we do calculate with the assets beginning of the year, assets end of the year, divide that by two. Of course, the seven months where I didn't have that money are not included in that. Also that is a little bit the reason why the numbers here are a little bit underrepresented. The realized gains and losses, again, Uli mentioned that already. We had some turnover in the portfolio which created these losses. Apart from that, there were no real surprises. Impairments and appreciations driven by regular depreciations on the real estate portfolio. Again, nothing extraordinary to write off. With nearly EUR 1.1 billion net investment income, we are happy. Again, it is a little bit more than we had expected. It is interesting to look at the bottom of that page, what happened to our valuation reserves. I had addressed that already various times. We have now here the on-balance sheet valuation reserves. These are those of the investments we account for at available for sale. The off-balance sheet values, that is what we have as hold to maturity, or what or others which we do account at amortized cost. All together, that number has doubled from EUR 1.1 billion to nearly EUR 2.3 billion. We have not taken advantage of that by realizing more. That is a buffer for potential yield increases in the future. A brief look and final look before I ask Uli to present to you then the outlook. At the asset allocation, that is rather stable. The corporate portfolio has increased to 35%, a little bit more. There is nothing more to be expected. The front three of the covered bonds have gone down a little bit here. A competitive investor, especially by the end of last year, was there with the EZB, also competing to buy these issues. That has come down a little bit as also the prices went down remarkably. The real estate is developing as well as the private equity. We keep these portions stable. We will hear in a second that with the reinvestment yields we do invest today, our amounts of around 1.7, 1.8. The expectations for the next year is around 3.3 of 1% ROI with increased assets under own management. We estimate the return from the net investment income, again, in the range of the previous year. I think with that, I conclude my details, and Uli, the floor is yours with the target metrics. Thank you, Roland. Okay, target metrics. This year I am happy to show it to you because it looks nicer than most years. You can see that we have achieved all group targets, including the earnings per share target with 10.1%. That is quite reassuring. I maybe mention the EBIT margin on the P&C side with 17% shows that this business continues to be rather profitable. You can also see that the economic targets, which are the xRoCA targets, we have achieved comfortably on both of our business groups. With that, enough about 2014. Let us look into 2015. First of all, P&C business. We have come off a pretty good start into 2015. The 1/1/2015 renewal was a little bit more favorable than we expected. We could keep the rates pretty well in many cases, and we also managed to slightly increase the volume. I can also say that the business opportunities for new business are actually quite good. We have a good deal flow of new business coming in. I would however say that this is almost exclusively from existing clients, where we have a good position as the go-to reinsurer. If I then look at the three segments, target markets, specialty lines and worldwide reinsurance. On the target markets, we see good growth in North America at a good margin, particularly in the U.S. where we have more than 600 clients. So writing larger shares with these clients and being involved in their new reinsurance purchasing, which they occasionally do. We see good prospects here. Continental Europe is a little bit of a mixed picture. Parts like France and some other continental European countries like Spain, for example, rather competitive and, of course, volume trending downwards due to selective underwriting. On the other hand, if you look at Germany, for example, still the underlying profitability trend is very positive. Being one of the larger markets in Germany, we benefit from that particular when it comes to the bottom line. On the specialty lines, all the business at this point in time is very competitive. So for us, the emphasis is entirely and only on the bottom line. We feel that we have significant businesses there that particular on the non-proportionate side still offers us good opportunity for profit. But discipline is extremely important here. On the marine side, rates have come down a bit, but overall, they are still a profitable business. The same is true for credit surety where we achieved the number two position in the market in 2010. This of course helps us now that the business have become a lot more competitive after good profitability in previous years. Of course, business close to my heart is aviation. Fortunately, I can hear a lot of good things about it because despite the losses, the market continues to be actually quite competitive. On the U.K. and Ireland business as well as on the facultative business, we see some growth again after having retrenched on the U.K. business last year. We also see improved profitability there. Worldwide treaty. Yes, we see a reduced premium on the cat side, which is not fully showing here. However, the exposure is still unchanged or even slightly up, but the rates are coming down. Therefore, again, conservative underwriting is important. On the worldwide treaty, we see plenty of opportunities in the emerging markets, particularly Asia, India and China to be mentioned, but also on the agricultural business which with what we have written recently, we can clearly see that we will have further double-digit growth on the agricultural business. Also on the structured reinsurance and the ILS business, we see good growth opportunities partly already materialized in the first two and a half months of the year. So all in all, we are relatively cautiously optimistic on our P&C business for the current year, even a little bit more positive than I would have been standing here, say, three months ago. On the life and health side, again, the emphasis is clearly on profitability, which we expect that we could further improve. Particular positive is the financial solutions business, where we have already a quite positive trend, and you will see that when we report our first quarter results. We already have said early on, longevity, we haven't got a new transaction so far this year. Well, maybe one slightly larger one. We are working on a few others. Market has become a little bit more competitive because most of the reinsurers are competing for that business now. Again, we take a rather conservative stance, looking for the right deals and not for the volume. On the mortality, we have actually seen good profitability also in 2014. That is also including the ING portfolio that puts the whole thing together. We expect continued rise of profitability in that market. I think we will be able to further improve, which means not make it profitable, but make it less negative our ING book. Of course, the new business that we produce in the U.S. still shows a positive variance actually to expect it. So overall that should be fine. On the morbidity where we have seen negative results, we believe that we also should see an improvement in Australia, where on the group business, we have very significant increases on the TPD exposure from that business. All in all, we are quite positive on the prospects for our life and health business in 2015. That brings me to the guidance, which we left unchanged. We believe that our volume will be at stable interest rates, I hasten to add, stable to low single-digit growth, a little bit like we have seen in 2014. Of course, if you look at that in EUR terms, if the current interest rates prevail, you will see some more meaningful growth in EUR terms on that business. Return on investment, 3%, Roland already mentioned that. However, on a higher volume of investments and the EUR 875 million group net income guidance, we left that unchanged compared to what we told you when we reported our third quarter numbers of 2014. We believe that on stable interest rates, that's pretty much the underlying profitability that our business currently shows, projected with a degree of caution, and therefore we left it unchanged. If you look at the dividend guidance, this is really our standard dividend guidance, which we developed many years ago, where we said, yes, we want to pay out a fair amount of our IFRS profit, but we also want to keep sufficient profits in the company to self-finance our growth. With the recent development of the capital, of course, we have deviated from that remarkably in 2014. Of course, if everything stays equal and the excess capital position remains equal or even slightly increases, the business opportunities stay equal, meaning that we still have a soft market and a competitive market, and there has been no major turmoil in the financial markets. Then of course, the situation is exactly what we have seen for 2014, and it is probably fair to assume that we will act similarly than we have done in 2014. But that, of course, is only if the situation in 12 months' time looks similar to what it currently looks, and we haven't got a crystal ball and a lot can happen between now and here. With that, I would conclude the presentation. I almost forgot the most important slide of the entire presentation. But of course, by switching the slides, Karl reminded me rather swiftly. These are still pretty much unchanged, the reasons why we are quite bullish for our profit guidance and the prospects for 2015. First, we believe, as I explained, further improvement and increase of the bottom line of our life and health business. Secondly, despite the structural soft market from a supply and demand point of view on the P&C side, we believe that we can keep our underwriting profit pretty stable. That also goes for the combined ratio, provided that the large losses stay within the budget. Reason, we feel that the quality of the business that we have remains good. Secondly, the buffers on the sufficiency level of the loss reserves remain intact or even slightly better than 12 months ago. And the retrocessional program has seen more favorable terms than 12 months ago. And that, if you put it all together, should result into a continued favorable underwriting result from our P&C side. I would, however, say that on the retrocessions, I say terms have improved. That does not mean that we see negative margins. If we have the expected loss level, we still see the margin to our retrocession there. On the investment side, in absolute terms, we feel that the earnings from asset under management should be quite stable. In relative terms, of course, coming down. And then we keep our competitive advantage due to our low admin expense ratio, which we were cards that we will continue to see that. With that, however, that concludes our presentations and we are more than happy to answer your questions. Well, thank you very much. We will now begin with our question and answer session. As a reminder, please wait for the microphone so that everybody can hear your question, especially those participating via the conference call. For people attending virtually and wish to ask a question, please dial 01 on your telephone keypad now to enter the queue. If you find that your question has been answered already before it's your turn to speak, you can dial 02 to cancel the question. We will proceed to take the questions from the participants here in the room first, and then switch to the questions coming from the conference call. I already see some hands up, and we start with the right-hand side with Ben. Thanks very much. Ben Cohen at Canaccord Genuity. Two questions, please. Firstly, in terms of the special dividend that you are paying, could you just say a bit more as to how you arrived at the size of that special? It seems to me that you actually could have done more to help support the ROE if you still have that 13% target into 2015. My second question, your share price is up, I think, 50% since we last saw you here in October or whenever it was. In terms of that rerating, is there anything strategically that you think that gives you more firepower to do? Would you feel that there could be some benefit to use that multiple maybe in terms of M&A or anything else strategically? That would be helpful. Thanks. Yes. Thank you very much, Ben, for those questions. I should press a button here. Okay, but I am mic'd on anyhow, so I think it is not so much of the problem. On the dividend, the EUR 4.25 was really driven by our German GAAP earnings, which we, of course, steer towards that level. We felt that this is a good dividend. It is about a little bit more than 50% of our IFRS earnings. And we thought that that would reflect the underlying strengthening of the capital relatively well. Could we have done more? Sure, you always can do more. However, we felt that it was a good level. Of course, that would still make it rather challenging to keep the ROE at the level you mentioned for 2015. But we have to see what else we can do there. On the share price, using it for M&A. While it is, of course, quite tempting, I would say, because the value is pretty good. It is a bit difficult to do that with our anchor shareholder, Talanx, with 50.2%, on the basis that they strategically want to keep the majority in Hannover Re. Okay. We continue with Kamran and switch then to Rutger. Hi, it's Kamran Hossain from RBC. Two questions. The first one is just, I guess it's coming back to M&A. We've seen a recently announced merger in Bermuda where we're going to get the fourth, fifth, or sixth largest reinsurance player in the market being created, depending on whose numbers you use. Do you expect to see any disruption from this merger? I guess, given their distribution, using brokers pretty heavily versus your distribution. The second question is just on your comments about the improved retrocession program. You've improved the program year on year. Should we expect the catastrophe loss ratio as a proportion of your net spend premium to actually come down in the future as a result of this? Thanks. Which loss ratio? The catastrophe loss ratio. Oh, yeah. Okay. If I first come to the question on M&A that we have seen in Bermuda. To the extent that is reinsurance driven, we see that marginally positive for us, because it means that there is one competitor less. On the latest one, both are very respectable reinsurance players. You just have an exploding panel there. There's just one left. Which is marginally, it's not overly positive, but it's marginally positive. We do normally appreciate mergers of reinsurers. Of course, there's another aspect to it. All these merged companies, they also have primary insurance activities where we are normally reinsure off. Of course, there is an expectation that they would increase their retentions for reassuring their primary business. That, of course, means that in order to keep our volume there, we would have to increase our lines to the extent that's possible. As you can see, it has some positive and some negative aspects. In general, I would say we prefer reinsurers to merge than primary insurers to merge. The question on the catastrophe loss ratio, that will probably stay reasonably unchanged because we did not change in absolute terms our risk appetite for cat. If you buy a little bit more retro, that means that we write a little bit more gross business. Because our risk appetite that we give us for ourselves still limits our cat writing significantly below what we would have been able to write if we would stipulate a higher risk appetite. We see that very clearly currently, for example, in the Japanese renewals. Thanks. Okay. The next question comes from Rutger, France. Yes. Thank you very much. Couple of questions about your economic solvency ratio. That was down quite considerably from 330% to 286%. I understand that the decline was almost entirely due to model changes. Can you please elaborate a little bit on what kind of model changes these were? What the key drivers for the decline was, and whether you expect further model changes and what impact they could have until you get the approval. Finally, once the model is improved, can we expect a very explicit target or target range for the economic solvency? Yeah. That's absolutely correct. We did do some model changes. That was, of course, after discussions with our regulator, where we will actually hand in our application for the subgroup model for Hannover Re at the beginning of April. I happen to have a meeting with BaFin tomorrow. These model changes were largely on the market risk, basically on the spread and credit risk. Up until now, the model had quite a lot of diversification between the credits and issues. Since in the dialogue with the BaFin, it was felt that we should group certain business segments closer together, which then reduces the diversification and that increased the capital requirements on that business. That really was a major change that we had. We believe that with the changes that we have done now, that would lead us through the application process for the subgroup model of Hannover Re. Of course, there will be future model changes because you have to really look at the model on a constant basis and see if the parameters that you have put in are still plausible and relevant. There is, of course, a model change policy that we have. I would not expect that they will be similarly drastic. At the same time, of course, we will be looking for target solvency once the model has been approved. That is the answer to that question, really. Okay. We continue with Andrew. Three quick questions. One just follow up on your last answer. I do not understand then why the diversification Benefit on page 84 has gone up 51%. If you have reduced the diversification, so how come the overall- Well, we- As a proportion of the gross capital requirement, it had gone up, I think from 32% to 36%. Yeah, the diversification within the credit and spread risk was reduced. Therefore, the capital requirement for the credit and spread risk and market risk widened. That of course meant that if you then look at the diversification with the underwriting risk, life and non-life, and the interest rate risk, then as the overall risks have increased, the diversification has increased as well. That is the diversification on the entire bottom line capital requirement. There was a significant growth in life and health underwriting requirement. Is that purely volume of business driving that? Yeah, that's mostly volume, actually. Okay. The two other quick questions. If I look at your life reinsurance business and your MCEV disclosure, over the last five years, there's been just short of EUR 800 million of negative operating variances or assumption changes related to U.S., U.K. longevity, Australian DII. You continue to express a lot of confidence in the life result improving, and also in your EV translating to IFRS profits. It's a bit hard for us to see that given the amount of assumption changes and variances have been going through. Do you think you need to do a more thorough ground-up review again of assumptions, or are we really past the worst on particularly the U.S.? I still find it hard to get comfortable with the outlook there. The only other question I had, I think the implication is that you booked the unused budget on large losses. Is that how you want us to think about it, Roland, as in the EUR 200, roughly, million of unused, and hence that's what's driving the slight increase in reserve buffer again? Thanks. Well, I will leave the budget to Roland, and will try to give you an answer on the life & health side. Clearly, there were negative developments on the DII, the group business, and the U.S. mortality business. We feel that we take these model changes early on to be on the conservative side there. Of course, sooner rather than later, we should come to a situation where the actual to expected and model changes are closer to the zero line, rather than being negative. I would expect that for the Australian business and the longevity business, we would not see major changes here. On the U.S. mortality business, I haven't got the same confidence as yet. We will have to observe that. But as far as the value of new business is concerned, at least the value of new business that we have created in recent years, has not been the source of negative variances or negative model changes. This has been more business that has been written quite a long time ago or has been acquired with the ING transaction. I would say with the underwriting changes that we made in 2009, at least we haven't dug us new holes, let's put it that way. And on the- Yes, I can come back. And maybe perhaps a short comment on the MCEV. We, I think for a few years already, mentioned that very openly that we really follow the guidance of the CFO Forum, which I'm a member of, very strictly. So also when other company maybe adjusted their way of calculating financial options and guarantees or whatsoever, we really stuck to the methodology. So there is no smoothing, no addressing. So we follow these things, and as the overall numbers are really positive, we look also, I would say, conservatively or very strictly on the guidance. Which led to what you felt is, in cumulative terms, an amount of adjustment which affects credibility a little bit, I think. But it is also a reflection of us really following the rules very strictly. Coming back on the unused budgets. If we look really at the numbers and the math, EUR 244 million have not been used. We, I think, addressed already over the course of the last three quarters that some of that falls down a little and what is written on Bermuda and in other areas. So my guidance would not be that EUR 250 million were strictly added to the redundancies. But what I mentioned is that 93% combined ratio in Q4 was better than before, so you see something. But if you do the math, one percentage point combined ratio translate into, what was the net premium? EUR 70 million, EUR 80 million. And I would not be surprised if we come to a couple million increase in the reserve redundancies. But again, the numbers are not final. But the message I give, it may be not the full amount, but it's part of that. I think it's also important to understand that a redundant loss reserve or difference to best estimate is not sitting there like an asset. It's recalculated every year. Part of the calculation is when you calculate user verge redundancies, because it's easier for this point, even it's not entirely correctly because we are IFRS accounting. But you calculate the redundancies at the end of 2013, which means that you do the triangles and stuff like that. Then, of course, you have an expectation how the loss payments will evolve over the coming years. If I'm now one year down the line at the end of 2014, I look at the same thing. Of course, the level of redundancies is determined by the new loss reserves I put up during the year. But also as far as the existing loss reserves, I then have to look how did the actual payment and advised losses of 2014 compare to what I've assumed at the end of 2013. Then I make the new calculation, where I then have a new expected cash flow that I assume from 2014 onwards for the underwriting years 2013 and prior, and new also for 2014. So this can change. In recent years, it always has improved because partly of the very low inflation. Clearly, if, for example, inflation would suddenly increase remarkable, yes, we would have our inflation hedge. But outside that, you would see that then suddenly also on the loss reserves, say up until 2014, you would suddenly see higher paid losses and higher advised losses. So that would then also go against the buffer. That is also the reasons why we keep that buffer. It's nice to have it, but it's not like a fixed asset which you can take and say take home. Okay. That answers your question. So the next question comes from Thomas Fossard, and then we continue with Olivia. Yeah. Good afternoon. I have got three questions. The first one will be again on the capital position. Back in October 2014, you indicated a free excess capital estimates of around EUR 1 billion. That was the last investor day. Could you update us on the year-end capital position adjusted for the EUR 500 million you are going to distribute in terms of cash return to shareholders? The second question will be to better understand your sensitivity to a strengthening of the US dollar compared to the euro. Could you provide a sensitivity of your net income to 10% strengthening of the US dollar? The third question will be related to your German GAAP results. Your equalization reserves are now reaching EUR 3 billion. So starting to be back on pretty high level. Could you provide a better understanding of where you are standing compared to a kind of ceiling? Or when potentially the equalization reserve addition will start to be a bit smaller than they are currently? Thank you. Starting with the last question because it is the easiest. If you do nothing about it, the equalization reserves will reduce most likely significantly in 2017 because the World Trade Center loss drops out of the 15-year average. Which reduces the volatility very significantly. That then also reduces the maximum amount that has to be put into the equalization reserve. There is, of course, options by intra-group reinsurance to deal with that issue a little bit before that. That depends how much capital management we need to do. Of course, for us, the best opportunity is always that we do not need to do any capital management because we can write such nice new profit streams that we can utilize the capital that way. But as we are not prepared to increase the volatility of our earnings with the current environment, that is not that likely. Excess capital position, we have not calculated end of 2014 as yet, but it is probably fair to assume that there has been a further increase to the, of course, retained profitability, but also the increased economic reserves, so to say, from currencies, but more particular, of course, also the gains on the fixed income. The US dollar sensitivity, I would leave that to my CFO. Yeah, thank you, Uli. Well, first of all, if we look at the impact on the other expense line or income and expense line, which we have seen, this should be zero. That is a translation of the balance sheet from one balance sheet date to the other. So we had been long, as I mentioned, in the USD and other currencies a little bit. Theoretically, of course, that should be zero. I do not really have a sensitivity here prepared for you, but let us do the maths together. If our EBIT is around EUR 1.4 billion, it was nearly EUR 1.5 billion, but let us take the EUR 1.4 billion, and 40% of our business and net investment income, as well as net technical income, comes from the USD. Now I, of course, do not know where the next catastrophe or where the large loss will happen. But everything else equal, 40% of the EUR 1.4 billion EBIT should be USD-driven. If that is, let us assume $600 million, and then you apply your 10% on $600 million, you arrive at a number which gives you a sensitivity. Okay. The next question comes from Olivia, and then we continue with Janet. Yes. Hi there. The first question is going back to your capital return. I take the point about managing the capital base and 425 being quite a nice number. But I just wanted to get your thoughts on the split between the basic dividend and the special, especially given you have sort of guided that earnings should trend upwards in the next couple of years. So why keep the basic dividend flat, and what sort of message does that send? Could you not have made that 360, 380 and paid the balance as a special? Just your thoughts on that, please. The second question on the life and health business. Particularly given the various issues that you are seeing in parts of the portfolio, I guess you are more reliant than ever at the moment on financial solutions, delivering very good margins and very good performance. So just wondering if you could comment on whether you've seen any changes there in competitive pressure. I know we've seen some peers stepping up their presence in that area of the business. I think 4Q profit standalone was a bit weaker than the rest of the year as well. Is there any sort of market changes that you're seeing at all? So just maybe some thoughts on that business would be great. Thank you. Okay. On the split of the dividend. The main reason is that if you look at our guidance for 2015, and you take 40% of that is just shy of EUR 3 per share. So, the ordinary or the normal dividend is somewhat aligned with our guidance. Even the EUR 3 would be slightly more than 40%. That's why we left it there. That's the first reason. The second reason, the 125 looks a little bit more meaningful than if we would have only done one. So that's the split. But the first reason is the more serious one. If I look at the financial solutions on the life and health side, we are very successful there in the U.S. where we enhanced statutory balance sheets. I guess we have a little bit of a first-mover advantage there. Competition has not really increased significantly there. We have the advantage that if the clients do the deals with us, we have proven that we can do them, we have proven that the regulators would approve them, and therefore, actually, the pipeline of business is actually increasing rather than decreasing. So that's a very positive part of the life and health business. Of course, if you look at our business that we run in Stockholm and Paris, for example, that is continuously showing very good profitability. So the basket on the life and health is a bit more mixed than I would like to see it, but it also has some very positive elements in it. Okay, the next question comes from Janet. Hi. I have two questions. Just a quick question on the dividends. I note that your GAAP earnings limits your dividend payout to some extent. Does that include the specials as well? Further on the EV, I noticed that the increase in EV was driven by the German new business. Could you just explain a bit on what's happening there and also what you expect from margins going forward? Because I noticed it dropped a bit. Should we expect a return to mid-teens there, or will that be a bit lower going forward? Thanks. Okay. Yeah, the entire dividend has to come from the German GAAP earnings. We call it a special dividend, an ordinary dividend. Of course, in the end, it's one number that has to come out to German GAAP profitability. EV, you mean embedded value from new business in Germany? I have, in fairness, a difficulty to follow that, because certainly our German life business, we see limited new business. The German life business at this point in time is quite profitable. But it's largely a financing business that is in runoff. There has been, if you look at the P&L account on the Hannover Rück SE or the E+S Rück, we have changed our business relationship with E+S Rück and Hannover, where in previous years, also on the life side, E+S Rück ceded part of the German business to Hannover, and Hannover ceded international business to Germany. We discontinued that. That, of course, meant that in the current year, the embedded value that was due to Of course, we discontinued that and paid out the embedded value of the future earnings, which was positive for E+S Rück because the business that they had assumed from Hannover had a higher embedded value than the business that Hannover had assumed from E+S Rück. Otherwise, on the life and health side, the German market is one where we put great emphasis on, but the actual new business projection in Germany is quite low. Okay, we have another question from Inyong. Thank you. We see that in the mortality and morbidity business, the EBIT margin is still below the 6% target, and you are talking about the U.S. mortality, morbidity impact. Is it possible for you to quantify that? And whether without those impacts, you would get to the 6% target for 2014? Thank you. Well, the morbidity is negative, I think, by 1.7%, and the mortality is actually quite positive. From memory, it is 7%. It's- The mortality is less of a problem despite the ING portfolio because there is a lot of other mortality business in the mix that is actually a lot better. Not least, the new business that we have written in the U.S. since 2009. Morbidity, it is a difficult class, but I still think that we should see an improvement due to the very high rate increases that we are getting on the Australian group business. And, of course, we have discontinued that one U.S. health scheme. And that, this year, helps the cash flow quite a bit because it is a little bit of pre-financing of rebates that our clients get from the U.S. government. And we had a negative cash flow last year, and part of that will come back this year. Unfortunately, not all of it. That is why I think we should reach the hurdle on the combined mortality and morbidity in the current year, and I hope I will not regret that statement. Thank you. Okay. Well, I think now we switch to questions coming from the conference call. I see that Vikram Gandhi has a question. Vikram, please go ahead with your question. Your line is now open. Okay, thanks for taking my questions. I have got two of them. One is on the P&C. It is remarkable that you have been able to improve the attritional loss ratio in this tough environment. If you can explain how were you able to achieve that, and more importantly, how should we think about the FY 2015 attritional loss ratio? The second is, I remember you flagged during the investor day last year that you are close to maxing out the redundant reserves. But you seem more confident today about it. If that is something imminent, I wonder why you chose not to increase your FY 2015 net income guidance. Thanks. On the attritional loss ratio on P&C, in some areas, we are really benefiting from the low inflation rate. If I look, for example, on the German motor business, which is a sizable part, the frequency of losses continues to come down. We also had some areas where we had increased attritional loss ratios on some of our facultative liability business and some of our agency business. I expect that not to reoccur in 2015. I do not think we will see an increased attritional loss ratio in 2015. It will not be improved a lot either, because the rates are clearly on average down. I primarily expect a few less losses, attritional losses, but also less premium. On the second question, why did we not increase the guidance? Well, it is early days, and there is a long time for the year. We still believe that the conservative underlying profitability of our current business fully supports our current guidance. We haven't taken into account an additional tailwind we may or may not get from the currency movement. But whilst one might think that the current currency movement may prevail throughout the entire year, we have no crystal ball, so we just work with stable currencies there. If I may add to that. If we just look at the numbers, and we've mentioned them before, we have 244 million unused budget. We had a positive impact from the currency translation. If you just take that together, which of course we cannot assume for the current year, you could say that the EUR 875 million already include some improvements elsewhere. If you just take the numbers as they are. Because again, we of course for the current year, have to assume that we use the budget to the full extent. Okay, thanks. If I can just add one more data on the economic solvency ratios on the two different basis, the 99.5 and 99.97. Of course, the modeling changes as I understand, related entirely to the 99.5 percentage basis. Would that be a fair assumption? Because the one on the 99.97 doesn't seem to have moved at all. Any comments around that would be helpful. I think the 99.97 has actually moved a little bit more even, if I recall the numbers correctly. That is because of the tail value. The individual components of the 99.7 have moved. However, so has the diversification. The overall number, probably not so much. That's the only explanation I can give there. Yep. Okay. Thank you. Okay. The next question comes from Frank Kopfinger. Yes. Good evening, everybody. I have two questions. My first question is on your guidance. In your guidance on slide 20, you say that it will be difficult to further increase the confidence level of the loss reserves, and that this may result in a positive effect on your combined ratio. I think this is something that you already said for quite some while in the past. Nevertheless, you kept on covering to your reserves. So when should we expect now that you stop this pattern and that you show a more cleaner combined ratio? My second question is on your run off triangle in the annual report. There you show for the years 2012 and 2013, you show a combined reserve strengthening of EUR 230 million for both years. Can you comment there on the drivers behind it, please? Yeah. On the later one, of course, on the newer years as we reserve on an underwriting year basis, there's of course the loss ratio picks on 2013 in particular, that comes through. On the buffers, as I said, it's a new calculation every year. This year we were still in a rather comfortable situation because if you look at the underlying reported profitability, we were in a rather comfortable situation. Therefore, we remained cautious on the combined ratios because we expect that the market will continue to softening as long as we not seeing any major volatility or deteriorating underwriting results in the reinsurance market. Therefore, of course, we are more comfortable if we have conservative reserves than having less conservative reserves. So we will keep them conservative as long as we can. However, I suspect that will not last for much longer. Okay. Just as a reminder, if you would like to ask a question, please press 01 on your telephone keypad now. In the meantime, we have two more questions, one from Peter Casanova and the next one from Thomas Fossard. Yeah. Peter Casanova, Kepler Cheuvreux. This was just a follow-up on the maths and the guidance from Roland. You told us that you had a currency headwind last year. We know that we had lower budget CAT expense. Now we have heard that there were some reserve additions. So what I would like to understand, do you believe that the underlying business is growing this year, or are we going for a decline, which the pure numbers would imply? Very simple question. Well, the top line will, I think, grow slightly. Of course, last year we had currency tailwind, not headwind. Yeah. We, of course, in the guidance, are not expecting any currency gains in the current year. Because we just assume that we are currency matched, and therefore, we expect the currency result to be entirely neutral. I think that is the basis for also our guidance with the flat and slightly increased turnover. That is the assumption that the currency exchange rates will keep flat. If you compare as to when we put up that estimation, which was early February, what happened since then, you could argue it is already to be adjusted upwards. But again, it does not make sense to do that on a daily basis. The assumption overall is that we are matched and that the currency exchange rates stay where they are all over the year. Then we would update these numbers over the course of the years. As soon as we have the first quarter results in, then three quarters of the year will be calculated on the basis of matched and flat currency exchange rates, and we would then already include the experience of the first quarter, and so on. I would also say that this is not meant to be a point guidance. We should say it should be in the region of 875, and of course, that leaves room both sides. It is not that we say it is exactly 875. How you would like us to understand is that you make an underlying improvement 2014 to 2015 if there are no big swings outside of what you can influence. Is this how we should understand the guidance? Well, the guidance is basically on a like-for-like basis. Because the guidance, we did that in the end of third quarter last year. We do that with our planning. The basis for the guidance is a bottom-up planning of our business groups. And of course, they plan the results for the coming year. Then we have a plausibility check, and that is then the basis for the guidance. Then after 1/1, we do the first expectation, and this is of course again done bottom up to see if there are major changes in what our underwriters believed, say, prior to the beginning of the year. And other than currency, which we take neutral, the changes were really not that dramatic that we would change the guidance up or down. Perfect. Thank you very much. The next question comes from Thomas Fossard. One question on the underwriting environment. If you could comment a bit more what you are expecting for April 1 and July 1, because looking at slide number 6 of your pack, it seems to be that more and more reinsurers are posting double-digit return on equity. It seems to be that the industry is far from showing any pain from the current environment. Though I know that the claims environment has been pretty low the past years. Still, how would you expect the year-end to have some impact on the underwriting environment? Well, I would assume that we will see much more of the same than we saw at 1/1. Being an overall soft market with the individual market players trying to show discipline. Partly successful, I would say. I do not think that will change a great deal. I would say from the opportunities to write business, for us, that should continue to be quite favorable as we currently see. The question is just the price, because we cannot, unfortunately, isolate ourselves from the market and charge a lot more than our competition and still get the business. We have to be careful and have to be selective in what we do. The good thing is that we can be selective because the business that we get offered is significantly more than what we write. So there is We are in the position to have that ability of selectivity. Also, I feel it will probably be a diverse market again, because if you go outside the cat space, the market has not been entirely loss-free. If you go to some of the casualty lines, some of the property per risk business, you also have just loss-driven price increases. You have to put that in the overall mix. But there's no question the market will continue to be difficult. Thomas, maybe I could add, I was intending to mention that during my presentation, but tried to keep it short. I think your observation is right. There are more competitors in the double-digit ROE space than in the years before. I think this is, of course, also driven by low, large losses, especially if you look at some. But these are usually listed companies, and they have achieved attractive or more attractive ROEs. They do come narrower. As soon as there will be the large losses again, and the burden or the various budgets will no longer be so loss-free as they had been before, there will immediately be pressure on those ROEs. Which also keeps us a bit comfortable that these positive developments here are to be defended and will create a floor. This is not to say that there will be no competition and everything is going to be great. But I think these more positive developments ROE-wise, do also have a little bit of healthy development for the industry. Okay, we have another question coming from the conference call, which is coming from Michael Hyde. Hi, good afternoon to everyone. Michael Hyde, Metzler Bank. Just one question. In the current low interest rate environment, many fixed income securities trade at a negative yield. Obviously, it makes sense to sell them immediately rather than holding them to maturity. My question, what fraction of your fixed income portfolio currently trades at a negative yield? More important, how much unrealized capital gains do you have on them, just roughly? Michael, you indicated that there should be a lot of them trading at a negative yield. I am not exactly sure why that is true, but to be frank, I do not have that number with me. Okay. We can follow up on that, but I do not have that perspective available in front of me. Okay, thank you. Sorry. Okay. I do not have any further questions from the conference call. If we do not have any other questions coming from this room, then we would like to thank you for your attendance, and we would like to conclude this call. You know my disconnect. For all those others here in the room, we would like to cordially invite you, on behalf of Hannover, for a snack and a refreshment outside of this room. Thank you for attending. Thank you for coming. Thank you very much.